|FOR THE RESPONDENT |FOR THE INDIANA SUPREME COURT |
| |DISCIPINARY COMMISSION |
| | |
|Samuel J. Goodman |Donald R. Lundberg, Executive |
|9013 Indianapolis Blvd. |Secretary |
|Highland, Indiana 46322 |115 West Washington Street, Suite 1060|
| |Indianapolis, IN 46204 |
IN THE
SUPREME COURT OF INDIANA
IN THE MATTER OF )
) CASE NO. 45S00-9908-DI-442
CHRIS P. KOUROS )
DISCIPLINARY ACTION
September 11, 2000
Per Curiam
Today we find that the respondent’s temporary use of clients’ funds
(which he held in trust) for purposes unrelated to the clients, without his
clients’ knowledge or consent, warrants a suspension from the practice of
law for at least twelve months.
This attorney disciplinary matter is now before us for final
resolution upon a Statement of Circumstances and Conditional Agreement for
Discipline tendered for our approval by Respondent Kouros and the
Disciplinary Commission. The respondent’s admission to the bar of this
state in 1992 confers our jurisdiction in this case.
Under Count I, the parties agree that in March 1998, the respondent
represented two clients in unrelated matters. He agreed to pay a $2,500
settlement on behalf of the first client with his own funds. He agreed to
pay a $750 settlement in behalf of the other client, again with his own
funds.
On March 16, 1998, the balance in the respondent’s client trust
account was about $83. That day, he issued a check for $2,500 to settle
the first client’s case. The next day, he issued a $750 check to settle
the second’s. The following day, he deposited into the account a $750
check from the second client, as well as another deposit of $1,750. The
balance of the account that day after the deposits was $2,583.70. On
March 20, 1998, the $2,500 check cleared the account, reducing its balance
to $83.70. The result of that transaction was to cause the second
client’s funds to be used to settle the first client’s case, without the
knowledge or consent of the second client. Five days later, the respondent
deposited $750 of his own funds to cover the second client’s settlement.
Under Count II, the parties agree that the respondent represented a
client in a civil damages action. The parties agreed to settle the matter
by the client’s payment of $5,000. The client provided the respondent with
the money, but the respondent failed to deposit it in his client trust
account and instead used it for purposes unrelated to the client. At about
that time, the balance in the respondent’s trust account was $78.70.
The respondent also represented a second client, whose case had
settled for $7,500. The opposing party’s insurer provided the respondent
with a check for that amount, which he deposited in his trust account,
creating a balance of $7,578.70. The respondent’s agreement with the
client was for a 1/3 contingency fee, although the agreement was never
reduced to writing.
The respondent during this time also represented a third client, who
had provided the respondent with $137 earmarked to pay a diversion fee. The
respondent failed to deposit the funds in his trust account and instead
used them for purposes unrelated to the third client.
During the ensuing weeks, the respondent issued several checks drawn
on the account in satisfaction of various obligations related to these
clients and their settlements. The net effect of these withdrawals,
coupled with his failure initially to deposit into the account all client
funds or funds he held on their behalf, left it with an insufficient
balance to cover their outstanding obligations or amounts owed to third
parties. On June 19, despite depositing $7,500 he borrowed from his cousin
to replenish the account and withdrawing $600 for his own use, the account
contained insufficient funds to cover $10,000 he was to have been holding
at that time for the benefit of the first and second clients. On June 22,
after two checks for client obligations cleared, the account contained an
insufficient balance to cover a $5,000 obligation to the second client.
Between June 23 and June 26, the respondent’s withdrawal of $550 further
depleted below $5,000 the balance in the account, again depleting the
second client’s funds without the client’s knowledge or consent. On June
29, checks drawn for the benefit of the second client (totaling $5,500)
cleared, leaving the account with a balance of -$1,208.30.
Pursuant to Count III, we now find that the respondent received a $500
settlement check on behalf of the minor daughter of individuals who were
otherwise the respondent’s clients and for whom he was maintaining funds in
his trust account. The respondent failed to deposit the check into his
trust account and instead used the funds for purposes unrelated to the
minor without her or her parent’s knowledge or consent. Later, when the
respondent issued a $500 check to the parents for the minor’s benefit after
having never deposited the initial settlement proceeds, the effect of
issuing that check was to deplete the funds the respondent was otherwise
holding for the parent-clients.
Under Count IV, we now find that on June 29, 1998, a day when the
respondent’s trust account posted a balance of -$1,208.30, the respondent
issued a $1,370.11 check, representing the net proceeds of a real estate
transaction, payable to a client. The next day, the respondent deposited
$2,442.11, the proceeds from the client’s real estate closing, into the
account, to create a balance of $1,233.81, an amount less than the
$1,370.11 he was obligated to pay to the client. During the next week, the
respondent removed another $1,150 from the account for his own benefit
without the knowledge or consent of his client, and on June 30 allowed a
bank fee of $23.95 to be debited against the account. By the time those
transactions concluded, the account’s balance was $59.86. On July 7, the
$1,307.11 check to the client cleared, leaving its balance at -$1,310.25.
On July 17, the respondent deposited $1,400 of his own funds into the
account.
As to Count V, the parties agree that the respondent received a check
for $750 on behalf of a client who was a worker’s compensation claimant.
Instead of depositing the proceeds into this client trust account, the
respondent used the funds for his own benefit. He later issued a $750
check from his trust account to the client. Six days later, he deposited
into the account $764.50 representing released bail bond funds related to
his representation of another client, increasing the account’s balance to
$834.25. That day, the worker’s compensation client’s $750 check cleared,
reducing the balance in the account to $84.25.
As for Count VI, the parties agree that the respondent settled a
matter on behalf of a client, receiving $5,603.24. Pursuant to agreement,
the client’s net proceeds were to total $3,735.49. The respondent
deposited the gross settlement proceeds into his client trust account,
which before the deposit posted a balance of $81.80. After the deposit,
the respondent withdrew his fee of $1,867.50, leaving the account with a
balance of $3,817.54. Thereafter, while he should have maintained a
balance of at least $3,735.49 to cover his obligation to his client, the
respondent withdrew $500 from the account, lowering its balance to
$3,317.54, without the client’s knowledge or consent. He also allowed a
$1.50 bank service charge to be deducted from the account. Over one month
later, the respondent issued a check drawn on the account to his client for
$3,235.49, $500 less that the proceeds due to the client. That same day, he
issued another check to his client, drawn on his office operating account,
for $500.
A lawyer should hold property of others with the care required of a
professional fiduciary. Comment to Ind.Professional Conduct Rule 1.15. A
component of this duty is contained in Prof.Cond.R. 1.15(a), which
requires lawyers to hold the property of clients or third persons that is
in a lawyer’s possession in connection with a representation separate from
the lawyer’s own property.[1] This “anticommingling” provision exists to
safeguard client funds from attachment by a lawyer’s creditors, and from
misappropriation or inadvertent misuse by the lawyer or others. The
respondent repeatedly infused his own funds into his client trust account
to cover shortfalls occasioned by his own misuse of the funds, and by so
doing violated the rule.
The parties further agree that by allowing client funds held in trust
to be used for purposes unrelated to the client without the clients’
knowledge or consent, the respondent converted the clients’ funds.
Conversion, under Indiana law, is defined as knowingly or intentionally
exerting unauthorized control over the property of another person. See IC
35-43-4-3. The respondent converted his client’s funds by allowing one
client’s funds to be used for the benefit of another, by permitting bank
charges to be deducted from client funds, and by using client funds for
personal obligations. Professional Conduct Rule 8.4(b) provides that it is
professional misconduct for a lawyer to engage in a criminal act which
reflects adversely on his honesty, trustworthiness, or fitness as a lawyer
in other respects. By intentionally or knowingly exerting unauthorized
control over his client’s funds, we find he violated the rule. Those acts
also involved dishonesty, fraud, deceit, and misrepresentation and thus
violated Prof.Cond.R. 8.4(c).
Finally, in Count II, by failing to reduce his contingency fee
agreement with his client to writing, the respondent violated Prof.Cond.R.
1.5(c).[2]
The parties agree that the appropriate discipline for the respondent’s
violations of the Rules of Professional Conduct is a suspension from the
practice of law for a period of not fewer than twelve months, after which
time he will be required to petition this Court for reinstatement should he
desire to regain admission to the profession. In support of this sanction,
they point to several factors in mitigation, noting the respondent’s lack
of prior discipline from this Court, his cooperation during this
proceeding, and the fact that, due to his bank’s decision to cover trust
overdrafts, no client was at any time deprived of use of funds as a result
of the respondent’s actions. They also note that during the time of the
respondent’s trust fund mismanagement, he suffered from a gambling
addiction and used client funds to cover gambling debts. They state
further that the respondent acknowledged his addiction, is receiving
counseling for it, participates in Gambling Anonymous, and is in recovery.
The respondent’s misuse of client funds is remarkably similar to that
of the respondent in Matter of Towell, 699 N.E.2d 1138 (Ind. 1998). There,
a lawyer, after receiving a worker’s compensation settlement on behalf of a
client, deposited the proceeds into his client trust account, only to later
use significant portions of the funds for the benefit of unrelated third
parties. We noted that the lawyer purposely used funds belonging to one
client to pay the obligations of another out of his “pooled” client trust
account in the apparent good faith belief that other client funds would
soon arrive to cover the expenditures. We noted further that
[The Court is] not persuaded that the respondent's actions were
totally inadvertent or unwitting; however, we are convinced that he
did not intend to deprive his worker's compensation client of the
value or use of his funds sufficient to find theft of the funds. What
he did was intentionally and without authorization use one client's
funds for the benefit of others, intending all along to replace the
money "very shortly" when the expected "replacement" funds became
available. Unfortunately for everyone, the other client funds did not
materialize for some time. . . we view his acts as somewhat less
culpable than outright theft. However, even in the absence of a
finding that the respondent stole his client's money, his gross
mishandling of funds held in trust for others nonetheless indicates
serious professional shortcomings deserving of significant sanction,
primarily for the protection of other clients.
Towell at 1142.
While it is true that, in the present case, the respondent temporarily
used at least some client funds to cover his gambling debts, like in Towell
the agreed facts here evidence no intent permanently to deprive clients of
their funds. This conclusion is fortunate for the respondent, since
outright theft of client funds generally warrants very severe sanction, up
to and including disbarment. Id., citing Matter of Good, 632 N.E.2d 719
(Ind. 1994); Matter of Shumate, 647 N.E.2d 321 (Ind. 1995). Given that
the parties’ agreement calls for a lengthy period of suspension, and in
light of our policy of favoring agreed resolution of disciplinary
complaints, we find that it should be approved.
Accordingly, it is hereby ordered that the respondent, Chris P.
Kouros, is suspended from the practice of law in this state for a period of
not fewer than twelve (12) months, beginning October 23, 2000, at the
conclusion of which his readmission to the practice of law, should he
choose to pursue it, shall be conditioned upon his successful petition
before the Court pursuant to Ind.Admission and Discipline Rule 23(4).
The Clerk of this Court is directed to provide notice of this order in
accordance with Admis.Disc.R. 23(3)(d) and to provide the clerk of the
United States Court of Appeals for the Seventh Circuit, the clerk of each
of the United States District Courts in this state, and the clerks of the
United States Bankruptcy Courts in this state with the last known address
of respondent as reflected in the records of the Clerk.
Costs of this proceeding are assessed against the respondent.
-----------------------
[1] Professional Conduct Rule 1.15(a) provides a limited exception to the
“anticommingling” rule and permits a lawyer to deposit his or her own funds
reasonably sufficient to maintain a nominal balance into a client trust
account.
[2] That rule provides, in relevant part, that contingent fee agreements
shall be in writing and shall state the method by which the fee is to be
determined, including the percentage or percentages that shall accrue to
the lawyer in the event of settlement, trial or appeal, litigation and
other expenses to be deducted from the recovery, and whether such expenses
are to be deducted before or after the contingent fee is calculated.